STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (including the Exhibits hereto, this
"Agreement"), dated as of March 31, 1997 is entered into by and among FAMCO II
LIMITED LIABILITY COMPANY, a Minnesota limited liability company (the
"Subscriber"), and MEDICAL GRAPHICS CORPORATION, a Minnesota corporation (the
"Company").
AGREEMENTS
1. SUBSCRIPTION FOR SHARES
1.1 NUMBER OF SHARES AND PURCHASE PRICE
Subject to the terms and conditions hereof, the Company agrees to issue and
sell to Investor 444,445 shares of Class A Stock at a purchase price of $3.375
per share for a total price of $1,500,001.87 (the "Purchase Price"). The shares
of stock purchased by Investor hereunder are hereinafter referred to as the
"Shares."
1.2 PAYMENT OF PURCHASE PRICE
Five Hundred Thousand Dollars ($500,000.00) of the Purchase Price shall be
payable on March 31, 1997 whereupon the number of Shares purchased thereby shall
be issued. Provided there has been no occurrence of an Adverse Event (as
hereinafter defined), the balance of the Purchase Price shall be payable April
15, 1997 (the "Second Payment"). An "Adverse Event" shall mean: (i) the Company
has not received the proposed financing in the amount of $4.1 million from
Norwest Bank Minnesota N.A. and Norwest Business Credit by April 14, 1997; or
(ii) Marquette Bank terminates its forbearance agreement and proceeds to
exercise its remedies against the Company; or (iii) the Company's auditors issue
a qualified opinion; or (iv) any action is brought or threatened against the
Company by Xxxxxxxxx X. Xxxxxxxx or ErgometR. If an Adverse Event occurs,
Subscriber shall have the option to cancel the Second Payment by sending written
notice thereof to the Company whereupon Subscriber shall have no further
obligation to the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Subscriber as follows:
2.1 ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota. The Company has all
requisite power and authority to own and operate its properties and assets and
to carry on its business as currently conducted and as proposed to be conducted.
The Company is duly qualified to do business as a foreign corporation in all
jurisdictions in which the failure to be so qualified would have a material
adverse effect on the Company's properties or business as now conducted or as
proposed to be conducted.
2.2 CORPORATE POWER
The Company has all requisite legal and corporate power to execute and
deliver this Agreement and the other agreements contemplated hereby, to issue
the Shares hereunder, and to carry out and perform its obligations under the
terms of this Agreement.
2.3 CAPITALIZATION
The authorized capital stock of the Company, the designation(s) of classes
of stock and the rights and preferences of stock, if any, are set forth on
Schedule 2.3. All issued and outstanding shares of the Company's capital stock
as of the date hereof have been duly authorized and validly issued, are fully
paid and nonassessable, and were issued in compliance with applicable federal
and state securities laws. The requisite number of shares of common stock of
the Company have been reserved for issuance upon conversion of the Shares.
Except as set forth on Schedule 2.3, no shareholder of the Company has any
rights or preferences not afforded all shareholders of the Company, including
without limitation, any pre-emptive or approval right pertaining to the sale and
purchase of the Shares.
2.4 AUTHORIZATION
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement; the authorization, issuance, sales
and delivery of the Shares: and the performance of all of the Company's
obligations hereunder has been taken. This Agreement, when executed and
delivered by the Company and Subscriber shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to laws of general application relating to
bankruptcy, insolvency or creditors' rights and rules of law governing specific
performance, injunctive relief or other equitable remedies.
2.5 VALID ISSUANCE
The Shares, when issued, sold and delivered in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, will be free and clear of any liens or encumbrances.
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2.6 COMPLIANCE WITH OTHER INSTRUMENTS
Except as set forth on Schedule 2.6, the Company is not in violation of any
term of the Articles or its Bylaws, any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree, order to which the
Company is subject or any statute, rule or regulation applicable to the Company.
The execution, delivery, and performance of and compliance with this Agreement
and the consummation of the transactions contemplated hereby will not result in
any such violation, or require consent under or be in conflict with or
constitute, with or without the passage of time or giving of notice or both, a
breach or default under any such term, or result in the creation of any lien,
mortgage, pledge, encumbrance or charge upon any of the properties or assets of
the Company.
2.7 LITIGATION
Except as set forth on Schedule 2.7 hereof, there are no actions, suits,
proceedings or investigations pending against the Company or any of its
properties before any court or governmental agency (nor, to the Company's
knowledge, is there any reasonable basis therefor or threat thereof). The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment, or decree of any court or governmental agency or
instrumentality. There is no action, suit, proceeding, or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 TAX RETURNS
The Company has filed all federal, state and other tax returns required to
have been filed by it and has paid all taxes which have become due and payable.
The Company has not been advised that any of its returns, federal, state or
other, have been or are being audited as of the date thereof. There are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment of any tax or deficiency against the Company, nor
are there any actions, suits, proceedings or claims now pending against the
Company in respect of any tax or assessment. There is no pending or, to the
Company's knowledge, threatened investigation of the Company by any federal,
state, foreign or local authority relating to any taxes or assessments, or any
claims for additional taxes or assessments asserted by any such authority.
2.9 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or the offer, sale or issuance of the
Shares or the consummation of any other transaction contemplated hereby under
applicable state securities laws, which filings and qualifications, if required,
will be accomplished within the required statutory period, and the filing
pursuant to Regulation D promulgated under the
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Securities Act of 1933, as amended (the "1933 Act"), which filing will be made
within 15 days of the execution hereof.
2.10 ACCURACY OF INFORMATION
The information which has been furnished to Subscriber are true and correct
and accurate in all material respects as of the date hereof except for financial
data which is accurate as of the date shown therein. Other than those listed on
Schedule 2.10, there are no employment agreements, stock option plans or
compensation plans of the Company.
2.11 USE OF PROCEEDS
The proceeds received from the sale of Shares shall be used for general
business purposes of the Company. No commissions are payable in connection with
the sale of the Shares.
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER
Subscriber hereby represents and warrants, severally and not jointly, to
the Company as follows:
3.1 AUTHORIZATION
This Agreement, when executed and delivered by Subscriber and the Company,
will constitute a valid and legally binding obligation of Subscriber,
enforceable against Subscriber in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency or creditors' rights and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.2 EXPERIENCE
Subscriber has such knowledge and experience in financial and business
matter that it is capable of evaluating the merits and risks of its investment
in the Company and has the capacity to protect its own interests. Subscriber
acknowledges that the Shares are a speculative risk. Subscriber is able to fend
for itself in the transactions contemplated by this Agreement, can bear the
economic risk of its investment in the Shares (including possible complete loss
of such investment) for an indefinite period of time and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in the Shares.
3.3 INVESTMENT
Subscriber is acquiring the Shares for investment for its own account, not
as a nominee or agent, and not with a view to, or for resale in connection with,
any distribution thereof.
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Subscriber understands that the Shares have not been registered under the 1933
Act by reason of a specific exemption from the registration provisions of the
1933 Act, the availability of which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of such Subscriber's
representations as expressed herein. The Subscriber understands that the Shares
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving any public offering and that under such laws and applicable
regulations the Shares may be resold without registration under the 1933 Act
only in certain limited circumstances.
3.4 ACCESS TO DATA
Subscriber and its representatives have been afforded access to corporate
books, financial statements, records, contracts, documents and other information
concerning the Company (to the extent such exists), and to its offices and
facilities, have been afforded an opportunity to ask such questions of the
Company's officers, employees, agents, accountants and representatives
concerning the Company's existing and proposed business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein. Subscriber further represents and acknowledges
that it has been solely responsible for its own "due diligence" investigation of
the Company and its management and business, for its own analysis of the merits
and risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 2
hereof.
3.5 RESIDENCY
For purposes of the application of state securities laws, Subscriber
represents that it is a resident of Minnesota
4. RIGHTS AND PREFERENCES
4.1 RIGHTS AND PREFERENCES
The Shares shall have the rights and preferences set forth on the
Certificate of Rights and Preferences attached hereto as Exhibit A.
4.2 REGISTRATION RIGHTS
The Shares shall have the registration rights set forth in the Registration
Rights Agreement attached hereto as Exhibit B.
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5. MISCELLANEOUS
5.1 GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of Minnesota as applied to agreements among Minnesota residents made and
to be performed entirely within the State of Minnesota.
5.2 SURVIVAL
The representations, warranties, covenants, and agreements made herein
shall survive any investigation made by Subscriber and shall survive the
Closing. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto shall
be deemed to be representations and warranties by the Company hereunder as of
the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto.
5.4 ENTIRE AGREEMENT
This Agreement, including the Exhibits hereto, constitute the full and
entire understanding and agreement among the parties with regard to the subjects
hereof and no party shall be liable or bound to any other party in any manner by
and representations, warranties, covenants, or agreements except as specifically
set forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
5.5 AMENDMENT AND WAIVER
Any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and Subscriber.
5.6 NOTICES
All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission or deposit with the United States Post Office, by first
class mail, postage prepaid, addressed: (a) if to
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Subscriber, at Subscriber's address set forth or at such other addresses as
Subscriber shall have furnished to the Company in writing, or (b) if to the
Company, at 000 Xxx Xxxxx Xxxxxxx, Xx. Xxxx, XX 00000, or at such other address
as the Company shall have furnished to Subscriber in writing.
5.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.
MEDICAL GRAPHICS CORPORATION
By: /s/Xxxx X. Xxxxxxx
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Its: Chief Financial Officer
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FAMCO II LIMITED LIABILITY COMPANY
By its Manager
Family Financial Strategies, Inc.
By: /s/Xxxx X. Xxxxxx
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Its: Chief Executive Officer
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